Do you remember the outrage a year and a half ago when the CEOs of Ford, Chrysler, and GM flew to Washington, D.C. in private jets to ask for $25 billion in taxpayer money to avoid bankruptcy? Not that selling off private jets would have covered the $25 billion these guys were asking for – but it would have been a nice start.

It’s unfortunate that we see this kind of arrogance and greed in the Corporate world. Millions of people were laid off from thousands of companies while big wigs like these CEO’s live in the lap of luxury. You saw very little about any CEO taking a pay cut during the turmoil this country went through during the latter part of 2008 and 2009. Instead, they cut out the jobs of average American’s while keeping their pay and perks intact.

Most CEO’s have a lucrative bonus plan in place – including the Founders of YTB. The difference between our Founders and the CEO’s of other companies is that Coach, Scott, and Kim’s bonus is based in part on the performance of the company. Some based on pay or salary, while another chunk is based on stock options. Unlike other CEO’s or companies (like the Big Three in Detroit) our three founders forfeited 355,000 shares in options each of the last two years because the company didn’t meet the performance goals they wrote down to achieve that would trigger each bonus.

In case your wondering – that’s called accountability.

While there were some riffs about the forfeiture of options from critics, I would have loved to see the outrage over actual shares being awarded. It’s one of those “damned if you do – damned if you don’t” scenarios we enjoy from Zealots who flip flop depending on how it furthers their own agenda.

Regardless of which side of the fence you sit on, the fact is our Founders aren’t the type who take big pay days when the company isn’t performing as promised. The buck stops with them so to speak – which goes back to their AL Williams days as “Reps”. (Not to mention its just good business.)

To further illustrate our Founders desire to create a healthy, viable company they’ve restructured their compensation based on overall performance rather than acting like the fat and happy Executives we see in traditional corporate models. The company announced the new pay structure in a press release on Tuesday:

In order to ensure the Company continues its best practices related to executive compensation, YTB is transitioning to a performance-based incentive compensation program. Effective for the 2010 fiscal year, certain Company executives are entitled to incentive compensation if the Company achieves growth in the number of Business Owners at fiscal year end compared to the beginning of the fiscal year; if the Company meets or exceeds certain financial objectives established at the beginning of the fiscal year; or if the executives meet or exceed certain personal or departmental financial and budgetary objectives established at the beginning of each fiscal year.

Nothing like taking personal responsibility and holding yourself accountable for the overall health of your company now is there? If our Founders and Executives don’t perform to acceptable standards – they’re not paid that handsome bonus other CEO’s are paid. Instead they created an incentive to meet or exceed goals which could compensate them above and beyond their previous pay structure.

Because YTB is a public company obviously all this was filed with the SEC and you can find details of the new compensation package along with a breakdown of objectives that are now required from the Executive Team. Compensation now rides on and includes the growth of business owners (or IBC’s), cash flow and available cash on hand, bottom line earnings reported to stock holders, and other discretionary objectives for each department.

Based on the Press Release that was issued – and the terms of the new compensation that were filed with the SEC – simple logic would have you conclude that the Founders and Executives are at the very least willing to do their part for the overall health of the company.

That being said – not everyone who read the filing was able to comprehend or discern what went down. In a very comical and incredibly bizarre “Google Alert” – some jack ass laid claim that our Founders could be getting ready to resign after landing a sweetheart deal.

I’m not kidding – our self-proclaimed “YTB Expert” thinks you can quit (or resign) AND collect severance to boot. His focus – a two year deal that’s structured under the old compensation package that he claims will enable Coach, Scott and Kim to ride off into the sunset. While they haven’t resigned (yet) according to this dolt – we all need to be cautious of this severance stipulation.

Typical.

For the record, the clause he didn’t “copy and paste” on his blog stated otherwise:

Accordingly, a beneficiary under no circumstances would receive any payment under the Program if he left YTB without good reason or was terminated for cause.

It’s not that a clause like this is really necessary. Can you imagine walking into the Boss’s office sitting yourself down and stating “I’d like to resign – what kind of severance can you offer me?”

You’d either be thrown out and most likely fired “with cause” (for being stupid) or suffer the brunt of company jokes for years to come. (Again – for being stupid.)

You might be wondering if this idiot wrote this out of desperation or due to sheer stupidity. While I’m certainly not a mind reader and I hate having words put in my mouth (like he does with me) I’m pretty certain that this zealot thinks we’re the suckers due to the growing number of YTB’ers (including myself) that make it into his “Dumbass Den”.

In his own arrogant and self-righteous way, our lack of intelligence can’t possibly uncover the obvious error because those in MLM aren’t smart enough. We’re beneath the almighty professionals who pick – poke – and pry at anything and everything our company does.

On the other hand: If you think Coach, Scott and Kim have even the slimmest chance of quitting and having the Board of Directors approve a single dime of the two year severance package that was written – you DO belong in a “Dumbass Den”.

Likewise, for those who are reading up on the internet about ZamZuu or YTB at this time – go back to Tuesday’s article and the statement that John is helping us weed out those that aren’t intelligent or responsible enough to uncover fact or truth. Seriously – If a big old red flag doesn’t come up warning you that nobody gets a severance package when they resign – how could they even be considered a viable prospect?

See my point?

Are his statements ridiculous, absurd, bizarre? Sure they are – that’s what we’ve all come to know, but not quite love about John. But trust me, there’s no way you’re going to convince an arrogant pompous ass like John Frenaye that he’s wrong. His ego is just too big and overpowering to allow anyone to knock any logic or sense in that brain of his. (That – or there’s just not enough room down there.)

At this point, the best you can do is smirk (or laugh out loud like I did) and be thankful and grateful that you’re not as desperate (or stupid) – nor are you likely to run into anyone who is because John’s pretty much got a lock on weeding out any bottom feeders for us.

Instead, turn it around and be thankful. If for nothing else – for ability to read and comprehend the English language.

Then you can move on and be thankful that our Founders are willing to do what it takes to provide a viable, profitable, and respectable business opportunity for those of us who see things for what they really are.

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That life is boring at YTB. ;-P

I apologize for not getting something out sooner – the kids had early release the last two days and we had projects planned. I also have a business to run and don’t have the vast amount of time in my profession that others apparently have. I have however been trying to sort out fact from fiction from various sources I know and trust via phone since the latest episode of “Days of YTB” has hit cyberspace.

Before we get started…I think it’s appropriate for the proper background music due the nature of what’s happened this week. For your listening pleasure, I’ve resurrected an oldie but goody that I’ve used before when there’s so much talk about YTB.

Apparently there was a mass exodus of wackos over the last 36 hours that have put out some pretty outrageous stuff. As usual, those of us who have a firm grasp on the situation are left to clean up the mess. Due to time restraints, I need to warn everyone that I have not read – but merely heard some of the rumors I’m about to squash. Therefore, please understand that some of what I might comment on – may not have ever been written in the vast space we call the internet – nor can I reference just who said it.

The following is a list of what I have heard and what I know to be true.

YTB’s CFO, John Clagg has resigned effective February 2nd. I’ve heard of various scenarios on how this came about. Some reasonable and some outlandish. The reasonable would consist of being burned out. With what the company has gone through since the California Law Suit was filed the day before the 2008 National Convention, and a new CEO who has a keen eye on the companies bottom line – it’s understandable that it would drain anyone.

Another reason I’ve heard is that John saw the writing on the wall – meaning, YTB isn’t going to make it.

Please…

One, the company has secured a $650,000 loan based on the expectant sale of the former home office located at One Country Club Drive. Which is odd – because it’s been widely publicized for years on various boards and blogs that YTB doesn’t have any assets to speak of. (Who knew?)

Two, it was announced on a company call yesterday, and corresponding documentation will be available to the field of some 300 $1000 Quick Start Bonuses will be in mailboxes across the country today. The ZamZuu e-commerce platform announced at the Coach’s Birthday Bash in early January has provided a much needed stimulus package for the field. When the field is making money, the company is making money. The enhanced commission structure enables the average person to attain a bonus, and that builds momentum.

You certainly don’t need to be a CPA to understand that cash flow isn’t the current problem at this point in time. (Still tight, but there is light at the end of the tunnel.)

An interesting observation from some time ago – I remember the exiting CFO being chastised by critics as “unqualified” for the position. It’s rather convenient that the ridicule and lack of qualifications are quickly tossed aside now that John has decided resign. I just love how folks can play both sides of the fence when a new position appears to benefit them. Happens with Directors too. All of the sudden these liars, scammers, and cheaters suddenly turn into Saints simply by leaving the company for another.

It would make any John Kerry supporter proud.

While there is a rumor of massive trading from our Directors due to this news, I’d hardly consider 29,300 shares massive. While John did resign on February 2nd, it was well after the closing bell on Tuesday. (3:00 Central time) I’ve never really understood just why this type of rumor persists with our Directors. I just chalk it up to ignorance and a way for critics to create more drama. Day traders have a ton more fun with this stock than any Director. Due to the timing of our CFO’s resignation and how suddenly (although not surprising) the resignation developed – nobody had any chance to benefit one way or another from this news. Based on the volume, between the verbal resignation and the release of the 8K – the numbers certainly don’t indicate insider knowledge.

Current CEO Robert Van Patten will fill in as interim CFO of the company until a replacement can be acquired. Mr. Van Patten is well equipped to fulfill the roll as CFO for YTB International, and has been in charge of much larger corporations in the past. His leadership is the largest reason why YTB has been able to acquire – all be it small – profits the last two quarters even with revenue down in 2009.

Another rumor floating around is that Ron Head, YTB’s Master Distributor has been terminated. While this may be the case after a thorough investigation – at present any word of termination is premature. Ron has I’m sorry to say been suspended due to possible cross recruiting.

If I’m getting e-mails and calls from every Tom, Dick, and Harry about the next “Big Thing” I can’t even begin to imagine what kind of carrots our Directors are seeing. How much greener the pastures are – how well everyone BUT YTB is doing in this economy – or all those “special positions” reserved for “true leaders” in the industry. I’ve seen and heard some real WHOPPERS in regards to rumors about what’s going on with YTB – including one I’ll mention later – that aren’t created by critics of MLM – but other MLM companies to lure people over to their company.

Attaining a Circle of Champion Director from YTB is a HUGE feather in the cap of any company because – as we all know – YTB created massive amounts of income for those who went to work. So much so, it caught everyone’s attention. Especially in an industry that understands and wants “recruiters”.

A personal note here – and this has nothing to do with Ron or any specific Director who has since left YTB for “greener pastures”. I have yet to hear of see any of YTB’s former Directors leave and actually stay with the next best thing they left YTB for. Several Directors that I know of have been with several different companies since leaving YTB and I can’t think of one (NOT ONE) who is currently better off today than they were the day they left YTB. Nor, with the exception of Corr, who just launched his new venture this week, is currently with the same company they moved on to.

That’s not to say they won’t be able to find another home. For some, I sincerely hope they do. It should be noted however that all of the fanfare up to this point has been nothing more than a passing fancy for every single Director who has left YTB for the next big thing.

Another very curious rumor floating around was that Coach, Scott and Kim were forming another MLM. Honestly, I just can’t wrap my head around this one. Critics, I could understand – they’ve always thought that our Founders would eventually call it quits. Some speculated retirement on some remote island with all our $50 checks in tow – while others speculated another industry entirely to rape and pillage. I’d expect that kind of stupidity from them.

It appears that rumor has also been squashed as Coach has been appointed the newest Master Distributor of…

Wait for it…

YTB.

Sigh…Coach will be recruiting again and honestly, it’s what he does best. I realize that frustrates some, and I know the fears and phobias surrounding the word “recruiter”. People slap that word on me all the time – and truth be told – yes, I do recruit. I recruit for Carnival, Princess, Sandals, Collette, Delta, Air Tran, Holiday Inn, Avis, Sears, Home Depot, Best Buy, and YTB. (Among others, but you get the idea.) We all recruit in some form or fashion and I fail to see what the concern or deal is when it comes to word “recruit”.

I can only hope that at some point in time they come come to grips with their “issues”. But don’t expect me to own that type of stupidity and fear just because it makes someone angry or bitter. The heightened outbursts and emotions I see reflects more about them, then it ever will me.

In closing, for those of you in YTB for reasons only you have a right to decide and place judgment on – don’t lose your focus or the sight of your dreams. Many of you got into YTB to sell travel and/or e-commerce. Others have found a new spark in the e-commerce platform that has triggered bringing people into a very promising opportunity that like travel a couple years ago was attractive to the masses.

If you’re like me, you see all the deposits waiting to turn into cash when these vacations are consumed this summer. Like the company, you need to think long term and tighten up to stay in the game in order to capitalize on the deposits your sitting on. Others saw checks in the form of cash back this week for doing what you already do – shop. More of the same is coming on the 11th when the residuals for being a business owner are sent out not only for your own shopping but all those who shopped on your sites.

By the way you realize they too got cash back checks this week from their own shopping experience with ZamZuu right?

Call them up…ask them if they think this works.

I got to tell you, it’s a much better alternative than searching the internet right now, trying to get a feel from a bunch of cowards who don’t have the guts to put a real name behind what they plaster all over the internet or talk about on the phone.

Because I had another post scheduled for today, it’s been bumped to Monday. I think you’ll like it and it drives home why ZamZuu is right on mark and why big name companies are going to a model just like ours to sell their product or service. You don’t want to miss it!

Hope to see you again on Sunday in your e-mail box with this week’s wrap up and the Just Picture It Now Newsletter.

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If you’re not part of our newsletter, you need to stick close this week. I know it’s been kind of slow – but things are starting to heat up a bit up in the Home Office and you need to be aware of the upgrades, advancements, and promotions that are going on – particularly this week. Those that plug in will be able to take advantage of the opportunities that present themselves. (Take a look at Friday’s post and the new Group Cruise Page to get a taste of what I’m talking about.)

Also released late Friday was YTB’s 10Q for the 3rd Quarter. What most investors want to see is how a company responds to it’s current conditions. I’m happy to report that YTB has responded with a small but important profit for the 3rd Quarter and an increase in net income by 26%. I want to advise you that what we saw from Friday’s upgrade and the Group Cruise page, and the the announcements coming up later this week are a direct result of available cash on hand that YTB invested back into the company in previous quarters. While critics were predicting bankruptcy, the Founders and Executives of YTB have been laying the foundation of what we will be seeing in the weeks and months to come.

What most people don’t realize (or refuse to acknowledge) is that YTB operates off of working capital. With the one exception of the Home Office building, YTB is completely debt free. What I’m also seeing more and more of in the Quarterly reports is more self reliance – meaning that what the company use to sub-contract out for is now being brought in house. This self reliance in turn controls expenses.

As a result the pieces are starting to come together. The years of making hard choices and investing millions back into the company is paying off. YTB posted a 3rd Quarter profit of $362K which is coming out of a very turbulent point in it’s history and very difficult economic times.

If you recall the previous quarter, YTB reported a $1.2 Million profit before they bit off $2.6 million in contract termination costs for the disposal of REZconnect, which resulted in one time loss for “discontinued operations”. Also gone is $1 million in legal expenses for California’s attempt to shut the company down with claims of being a gigantic pyramid scheme. $250K still remain of the $1 million settlement made in May which squashed the Attorney General’s attempt to end YTB’s existence.

While some have speculated that items such as these were insurmountable, the company continues to show that it’s able to answer the speculation in the black.

I can’t knock those that have left. It appeared that everyone and their mother was telling us that YTB’s days were numbered. It’s human nature to buy into the doom and gloom – especially when you’re bombarded with bias media and overly obsessed and obnoxious critics. Even “experts” like our auditors, didn’t have confidence that YTB could pull this out.

Yet, here we are three quarters through 2009. Yes there’s been a decrease in Travel and Travel Stores out there due to the harsh external conditions over the last two years. What has also decreased general and administrative expenses of $9.5 million to answer that and keep the the company solvent. That’s called corporate responsibility and when you show profits of any kind, it provides a very resounding answer to all the negative speculation.

If there’s one thing I’ve learned after all this time it’s this. You can’t talk your way in or out of anything – you have to do it. Talk is cheap, and while walking the walk may take longer to show results, it produces a much better result.

What we saw on Friday and will continue to see throughout this week are some very solid tools and answers on what the company intends to do to keep the company solvent and viable. YTB didn’t react – it responded. (And there’s a huge difference in that.) There have been some very significant and important changes at the top of the company that puts key people in roles in which they excel. Scott and Coach are recruiters – and are now out in the field doing more with the field. Bob Van Patten has taken over the day to day operations, and manages the income and expenses. (He also appears to be in complete control of that aspect based on YTB’s bottom line.)

Like last weeks Group Cruise page – now comes the value these changes produce for those of us in the field. We’ve seen plenty of it with RPM Trainings, the Sail-a-Thons, shopYTB, and site upgrades like YTB Golf.

Like I told you at the top of this post – stick close this week – there is more to come!

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I always knew this day would come. I had no idea when or how it would evolve, but I knew it was coming. J. Lloyd Tomer, or “Coach” has handed over his Chairman of the Board title to his son, Scott Tomer so he can take some time to enjoy his “4th Quarter”. Coach will do what is true to his heart and what he does best: Mentoring the sales force through Coach’s Corner while increasing his efforts to the Company’s philanthropic division, Passport to Giving.

That’s who Coach is. Those of use who know him, know how much he’s given back to the community. He’s been a teacher and mentor most of his life and it’s fitting that he moves into this phase of his life during his 4th Quarter. News of Coach handing over the reigns to his son Scott Tomer as Chairman of the Board and Robert Van Patten being names as CEO of YTB International came out today in an 8K filing.

After looking over some of the articles and news documented here, this move has been in the works for some time. We’ll review the changes and moves the last six months for you below to help you understand how well planned and thought out the new changes are. However, this has been something that was understood by Coach, Scott and Kim from the very beginning when YTB was founded back in February of 2001.

With Coach at the age of 75 and new book finally out, a Co-CEO who’s had 6 months to evaluate the company and it’s assets, the new Board not only in place, but with time under their belt so everyone could become acclimated, the timing was right to pull the trigger on this. The new changes also move key personnel into positions and talents they are best suited for.

From what I know of all the executives involved in the new changes announced today, virtually nothing about YTB as we know as TSO’s or Reps here in the field will change. Scott, Coach and Kim will still be around doing what they do best as Reps. (In fact, Coach will still be here in Atlanta in early November.) However, with YTB being publicly traded, YTB International now has a Chief Executive Officer and President in Robert Van Patten, who not only understands Wall Street, but from what I know, thrives in this atmosphere.

Back in April I wrote about Robert Van Patten, and actually had a chance to briefly thank him for all he’s done for the company while at this years Convention. Mr. Van Patten brings over 25 years of senior management experience to YTBI and was previously President of IMC Agribusiness, an $800 million dollar division of IMC Global. IMC was also listed on the New York Stock Exchange. The company now has someone with the experience and temperament to deal the day to day issues of running a publicly traded company. While few have laid claims to the demise of YTB, with predictions of bankruptcy, we owe a tremendous amount of thanks and gratitude to Scott and Coach for stepping aside to allow Mr. Van Patten to make the hard choices and decisions he has over the last 6 months, but also owe the same to Mr. Van Patten for insight to make these difficult choices.

New Board Members Thomas Baker, Jack Humes, and Patricia Williams who were appointed the YTB’s Board of Directors in June also have vast experience in finance, accounting, entrepreneurial business development, and legal services to corporations and governmental bodies. Their new insight and experience brought to our Board also played a key role in the changes made to YTB.

To Coach, Scott and Kim’s credit – They not only understood that Mr. Van Patten was best suited for this new role – they allowed him to execute the changes necessary.

Make no mistake however. The move announced today by YTB and it’s Board we’re carefully thought out and planned by Coach, Scott, and Kim. If they didn’t believe this was the right move for the field and the company as whole, none of this would have happened. They’re Reps at heart. After a fight and successful settlement in place in California which not enabled YTB to continue doing business in the state, but kept our compensation plan in tact, there’s sufficient prove the Founders have held true to their heart.

By handing over the reigns to Mr. Van Patten to deal with the day to day operations of the company as CEO and President of YTB International, Scott moves over as CEO of YTB Marketing, and Coach is completely freed up to do what he loves – and that’s being with the field.

Key people in key positions – doing what they do best. What a concept!

It will be nice to have both Coach and Scott back here in the field. Coach will not only be doing a book tour with his new book “The Fourth Quarter”, but also has plans for 12 Day Tour to Israel and Jordan in April of 2010. (Check your Travel Portal for more details.)

All in all, it’s a great move for YTB, especially with the way this all this developed. This isn’t some band aid or hasty move that didn’t have input or thought from everyone involved. Not with the Board of Directors YTB now has. Gone are the “good ol’ boys” and “buddy system” and in with some very promising and talented executives. 

Congratulations to Scott, Kim and especially Coach for making this choice, and thank you for your ability to let go. It shows this Rep and TSO you really do care and have my best interest at heart.

And Coach – enjoy your 4th Quarter. ;-P

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The week before the Convention Scott Tomer joined our team on a conference call. I remember Scott telling the group that he couldn’t put his finger on the exact moment or particular event that shifted the momentum back to YTB. He (like me) could sense a change, a shift in direction after all the baseless attacks and bantering going on concerning our company. Back in April, YTB announced Robert Van Patten as their new Co-CEO. Mr. Van Patten brought 25 years of senior management experience to the company and had been charged to oversee many of the administrative, accounting and corporate governance issues of the company.

Few people realize that YTB and Mr. Van Patten agreed to terms the very day word came of the tentative settlement of the civil lawsuit filed in California. As I thought about today’s topic I remembered both the e-mail that came in about the tentative settlement, and the conference call that followed with news of both the pending settlement and Mr. Van Patten’s appointment as Co-CEO.

One of Van Pattens first orders of business was an internal audit and review of YTB International. We’ve seen many changes in the company since Van Pattens arrival. If you looked at the Q2 financials that were released a week ago, you’ll see Roberts fingerprints all through that document with cutbacks, cost cutting, even the disposal of nonperforming subsidiaries. (A traditional Brick and Mortar model.)

I can also assure you that Van Patten had a hand in the newly appointed Board Members who add a tremendous amount of business savvy to our Board of Directors. Our new Board was introduced to everyone at the Convention and I had an opportunity to catch up with Robert and our CFO John Clagg after Friday afternoons general session to thank him for all the hard work and difficult choices he’s made to ensure that YTB comes out the other side of the economic slump. When you combine the economy with the bizarre accusations and constant obsession of our critics on the internet, that’s not an easy task.

Day before yesterday, I got word from Mr. Van Patten regarding the company appointment of Damian Jones as Director of Corporate Affairs. Damian starts his new roll today at the home office, however, he’s no stranger to the company. I met Damian back in February and learned that he was instrumental in the development of YTB Golf and the creation of this viable niche site for our Travel Store Owners who love the game. Damian spent several years with Perry Golf, a premier golf destination travel company we offer on the site. Damian was also instrumental in the introduction of Proam Golf for golf equipment, and Worldwide Golf Vacations for golf resorts and spas now offered on our site. His background also includes management of construction projects as well as business development and legal affairs. (He’s a graduate of Louisiana State University with a degree in architecture and he received his law degree from Tulane University.)

According to Robert Van Patten:

In the role of Director of Corporate Affairs, Damian will first develop a new Company Business Plan, incorporating the franchise concept the Company is moving towards.  Also, he will work with staff to develop a communication protocol so that all home office personnel are aware of new and changing programs that take place in the field.

Both of these issues were the top two concerns of key management personnel during the internal audit review that took place earlier this year. After these assignments are well underway and/or completed, Damian will assist me in managing the legal issues of the Company, including the registration of the franchise model that will be rolled out in all states at the start of 2010.

I wrote back in April about the Master Mind Group that was highlighted in the classic book “Think and Grow Rich”. The idea of the Master Mind is to tap into the expertise of others in order to help the overall good of the group. (Or in this case company.)

Since the implementation of the 2020 Vision Group that was formed from the idea in the book, the Master Mind concept been one of the most significant changes in the history of YTB. Damian’s appointment as Director of Corporate Affairs is yet another example of YTB’s commitment to put the ball in the hands of play makers who can effect change and make things happen. He not only brings experience and knowledge to the role, but a passion I’ve witnessed personally. In my opinion, (among others I’ve talked to over the last few days) this is a perfect fit.

Please welcome Damian to our staff and wish him much success in this new opportunity with YTB International.

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YTB’s Quarterly financial report came out on Friday. During this years Convention, Scott Tomer announced a Q2 profit on earnings before income taxes. He was correct, as YTB did post a $1.2 million net income from continuing operations. What he may or may not have known until after the Convention however was a $2.6 million in contract termination costs for the disposal of REZconnect, which resulted in a “discontinued operations” line item resulting in a loss of $2.8 million total dropping the $1.2 million profit into a $1.5 million loss overall for the quarter. The current portion of the $2.6 million liability balance is $608,000 and is required to be shown in our SEC filing based on future commitments.

REZconnect has been somewhat of a sore spot in years past. Micheal Brent had been selling off shares like it was candy. Rumors surrounding the subsidiary also pointed to a net loss in revenue for the entire company for years. This was the first time the subsidiary had been broken out to show it’s contribution. REZconnect operations reported net revenues of $869,000 and a loss from operations of $463,000. The Board of Directors made a strategic decision about the REZconnect business model, which they stated was serving primarily brick and mortar travel agencies, and felt it was not compatible with YTB’s current and future plans.

“As a result, the Company expects to realize cash savings of $2.4 million over the next 5.5 years based upon the cash payments to be made under the employment severance agreement versus the cash payments that would have been required under the original employment contracts.  Thus, while the Company has recognized significant expenses in the current period, the cash savings in the coming 5.5 years will serve to contribute a significant savings in terms of liquidity, helping to strengthen the Company’s position.”

In this current economic climate companies need to cut dead wood. While I have not seen, nor do I really care to see what others will be saying about YTB’s financial condition, I’m willing to bet you that they’ll be pointing to the huge loss in revenue over the last year do to the pyramid crumbling. While they will most certainly be pointing YTB’s “business model” as the cause of the loss in revenue, you should take a look at other company revenues to compare what they’re doing in this current economic climate. Royal Caribbean’s revenue (and profit margins) have declined significantly, resulting from large profits plummeting to significant losses over the last four quarters.

People are not spending in this current economic climate. Period.

It should be noted that the hemorrhaging of our RTA’s has slowed significantly in part due to the California settlement. While there was an enormous amount of speculation over California winning it’s argument of a gigantic pyramid scheme and successfully shutting the company down, the truth (as always) finally came to light. In addition, the “ungainly monster of 39 pages and 133 paragraphs” that was submitted as a class action law suit was also thrown out by the courts. Current RTA’s are just now starting to realize what I’ve known all along.

If you’d like to read my analysis of what our critics actually know about MLM and YTB in general, I invite you to read my e-book entitled “What the Critics Know About YTB“.

To further illustrate my point, I did take note of a couple of things in the notes section that critics were speculating (as they always do) about YTB’s financial condition and what the company would and would not be able to do.

Once Scott mentioned “profits from continued operations” our second payment for the California settlement was brought up. Some wondered if we happened to skip that payment in order to show profits. It should be pointed out that it was in fact paid and half of the settlement money is behind the company. Payment of $250,000 was paid as scheduled before the June 30 quarter ending.

In March, YTB’s credit card processor increased it’s reserve requirements, resulting in a $2.7 million balance to be held in reserve. While it was speculated that YTB would not be able to acquire the funds necessary to obtain the balance, that request was also achieved during this quarter. This too is now behind the company.

One of the funniest twists found in the financial statement that I doubt you will find anywhere but here is the saga of the proposed Conference Center that was envisioned by YTB to be built on land the company currently owns. Back in November, YTB sold a 9.9 acre out parcel of the 59 acres it owns to an undisclosed buyer. In late July, we found out through the media and the blogs that the buyer plans to build a Holiday Inn Express and a Country Kitchen gas station on the land that has been purchased. When news came out that the Wood River City Council voted to approve a funding agreement with Aventurs Development LLC. nobody bothered to check if the land in question had in fact been paid for.

“In addition to other consideration, the Company received a $500,000 promissory note dated November 24, 2008 as proceeds for the sale of land situated in Madison County, Illinois, which was non-interest bearing so long as there was no event of default thereunder.  Principal and other amounts under the note, collateralized by the related land sold, was due and payable on March 24, 2009.  On April 22, 2009, the Company sent a notice of default under the promissory note and mortgage to the purchaser because the purchaser failed to satisfy all obligations under the note within 120 days.  The notice required the purchaser to cure such non-payment within five business days of receipt of the notice, as required by the mortgage.  On May 6, 2009, the Company filed a complaint for foreclosure in Madison County, Illinois Circuit Court under the terms of the promissory note and mortgage because the purchaser failed to cure the non-payment within the required five business days.  On June 2, 2009, a notice of foreclosure was recorded against the land.”

Of course, like everything else that backfires on our critics for drawing conclusions based on what he reads and hears on the internet without checking actual facts, mums going to be the word on this. Instead, they’ll continue to focus on yours truly and the gross error I made when I didn’t check my source. As I’ve learned over the weekend, thanks to many comments, e-mails, and phone calls, it’s much better to surrender defeat in cases such as this in order to move on and get back on track.

Lastly, it should be noted that the company has made significant advances in curbing it’s spending and keeping an eye on the bottom line. Those of us who were at this years Convention saw evidence of that. With the current details listed in the notes section of the quarterly report just filed, we see more documentation of YTB doing what it needs to do in order to survive. Many of the hard choices made in prior months have proven to be significant, and while time will tell if the elimination of REZconnect will help YTB’s bottom line, the future looks to be significantly better than a single number found at the bottom our financial report.

A major key in YTB’s survival and prominence in the industry is educating those who may be looking for opportunities as the country starts to come out of the current economic condition. With YTB’s new tools and upgrades just announced at Convention, it may prove to be significant in showing the company’s strength instead of weakness.

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When YTB first started back in February of 2001 all the Founders had was a goal of being the largest seller of travel in the industry. They didn’t have their first RTA, they didn’t have a travel partner, they didn’t even have a booking engine, nor did they have their first travel sale. A bold statement from three guys who had no experience in the travel industry.

What YTB found was a company called REZConnect who came into the picture in 2002. Michael Brent, the President of REZconnect made an agreement to provide travel web site hosting for YourTravelBiz.com. By 2004 the partnership looked to be successful and the two companies merged and changed its name to YTB International, Inc.

All systems were a go and beginning in 2005 YTB started it enormous growth from 8000 RTA’s to 138,000 in 2007.

Once control was placed in the hands of YTB, a series of events happened that started the exit of both Michael and Derek Brent. On November 22, 2006, each of the members of the Brent Group resigned from their position as a member of the Board of Directors with the Company. Michael Brent also resigned from his position as President, and Derek Brent as Secretary of the Company. Along with the resignation both agreed to grant an irrevocable proxy to Lloyd Tomer (Coach) , Scott Tomer and Kim Sorensen with respect to all shares of the Company’s Common Stock or other capital stock of the Company now owned by the Brent Group.

The Founders of YTB were now in control.

Soon thereafter, Michael Brent started to sell his shares of stock. While this has been a bone that critics like to gnaw on with questions about why “executives” are selling, none of them ever considered that the direction of the company was no longer in Michael Brent’s control, and never would be. He built REZConnect and it was more than likely time to cash in on what he built. To this day, Michael Brent remains the largest single share holder in the company, yet has no voice in the day to day operations of YTB, or it’s direction.

For the last two and a half years, REZConnect has been sitting in New Jersey doing their own thing, and minding their own Vacation Central business without input or direction concerning YTB. They have however, remained the YTB payroll, and they have appeared on all press releases as a “wholly-owned subsidiary” of YTB International, Inc.

The last part of the REZConnect relationship, partnership if you will, with YTB was announced Tuesday in an 8K which stated an Employment Severance Agreement by and between REZConnect Technologies, Inc., formerly a wholly-owned subsidiary of YTB, and Michael and Derek Brent, former Chief Executive Officer and President of REZConnect.

I’ve seen a statement or two about this being another “fire sale” of sorts to generate revenue because YTB is in financial trouble. I’m not sure how returning a $275,000 certificate of deposit can be deemed a “sale”, but as we’ve seen so many times before, critics will grasp at any mud they think of that might stick.

Based on what I know about this relationship and have verified with other sources close to either YTB and the Brents, this is an end to a five year plan. REZConnect has not had an active role in the operation of the YTB booking engine for some time. Furthermore, YTB is looking to curb its expenses and there is solid speculation that the severance was initiated by our Board of Directors, 3 of which are brand new members, with an eye on YTB’s bottom line. We also can’t discount the possible role of Co-CEO Robert Van Patten who now oversees administrative, accounting and corporate governance issues for YTB.

It was time to make this break. Personally, (and this is only my opinion) this break was long overdue.

Don’t get me wrong, REZConnect served a very powerful role for YTB at a time when we didn’t have the foundation or the relationships that we do now. (That comes with proving yourself as a top travel seller.) Because YTB reinvested into itself (which showed up as losses in “income”) the company acquired assets such as land, technology, and office space to house the entire company. Today, YTB is standing very much on its own.

The issue I have are the morons who keep pointing to Michael Brent’s stock sales with questions about “What does he know that you don’t?” None of the idiots who ask that question have taken the time to read the notes found on every one of those forms. If they did, they would realize how dumb they sound to someone who takes the time to read the form in full to realize that the stock represents a monetary value only, and not a sign of anything to come. Of course we can’t discount the fact that some of these dolts do in fact know about the irrevocable proxy, but are betting that those who find their questions on forums and blogs won’t take the time to investigate on their own, which could result in more mud drying and sticking for them.

Even with their employment being terminated, the terms of the severance package are very favorable for the Brent’s, as it should be. Ownership of the stock remains with them, and their #2 Rep position with the company also remains. (Because of the Bill of Rights in place to protect all Reps.) What this does for YTB is eliminate administrative costs in regards to salary, insurance, health and medical benefits as well as participation in the Company’s profit-sharing, incentive bonus and pension plans.

There have been a number of positive changes in the last few months. A Co-CEO, new Board Members, industry awards, recognition as a top seller of travel, moving forward with our franchise model, and a settlement over some very ugly accusations. This is another positive change, if for nothing else than to put an end to those silly questions about what Michael Brent knows that we don’t.

All the best to the Brent Group, and REZConnect. And thank you for seeing what many would not or could not when YTB was young and unproven.

PS - If you're involved with YTB, sign up for our FREE Newsletter. As a Website Owner or Website Seller, we'll keep you up to date with all the latest news, acquisitions, and developments with YTB.

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